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C. Shivkumar

Bangalore , Sept. 21

THE upheaval in the non-life insurance sector has begun with Kolkata-based National Insurance Company Ltd grabbing the top slot from the New India Assurance Company Ltd (NIACL).

The hitherto second largest insurer, United India Insurance Company Ltd has now been relegated to the last slot. Occupying the third slot is the Oriental Insurance Company Ltd.

All the four are government controlled insurance companies, though corporate rivalry among them is intense.

Sources said that Oriental Insurance Company triggered the change in rankings by bagging the prestigious Indian Airlines (IA) account from New India. Loss of the IA account implied that a premium of Rs 100 crore was conceded to Oriental, the sources said.

However, the sources added that the premium for IA has dropped substantially. Last year, NIACL had earned a premium of Rs 180 crore from the IA account. The drop in premium was entirely on account of the softening trend in the international reinsurance market, the sources added.

FacRe covers for aviation currently cost about 0.4 per cent of the sum assured. These tariffs had reached almost 2 per cent of the sum assured in the aftermath of 9/11 terror attacks in US.

Besides, since the last two years, there were few claims from the global aviation companies and these have also allowed the tariffs to remain soft. The fall in reinsurance cover, the sources said, allowed Oriental to provide a competitive tariff to IA.

In terms of profitability and capitalisation, New India continued to be the leading insurer. Net profits for the last fiscal year was expected to be in excess of Rs 400 crore for the company. Capitalisaton of New India is in excess of Rs 5,000 crore.

However, profits for the last fiscal for all the insurance companies were driven by high investment and treasury operations. Besides, some of them have also masked their profitability by making excess provisions for unexpired and IBNR (incurred but not reported) liabilities.

Profitability of core operations also continued to be pulled down by high losses in the motor insurance sector.

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